Finance & Lending

 

10 16 2015

The Benefits of Alternative Financing

10 16 2015

The Benefits Of Alternative Financing

Following the recession, many banks began focusing their attention on bigger fish looking for larger loans, leaving those owners without knowledge of alternative business financing out in the dark. This shift from main street to Wall Street ended up creating a funding gap that many small-business owners think is insurmountable to them finding a reliable means of funding.

According to a recent survey by Manta, two-thirds of small-business owners believe there is a dearth of funding options, while 69 percent think nothing has been done to improve the funding environment over the past year. Since many of these owners remain unaware of the full spectrum of funding options, more than 70 percent of respondents continued utilizing traditional financing methods such as a bank loan or credit card. A mere 25 percent thought to take advantage of alternative lenders.

Manta Chief Executive Officer John Swanciger lamented the lack of small-business owners using alternative financing options, despite the fact that so many options exist.

“However, we’re seeing a gap between what’s available and the perception among small businesses that the lending environment has not improved,” said Swanciger. “Even though traditional bank loans are difficult to secure, small businesses are still apt to rely on them.”

There are many reasons small-business owners should consider alternative financing. Here are three good reasons for seeking out and obtaining alternative financing:

Meeting qualifications

Only half of the small business loans requested are approved, according to a survey by the Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia. While small banks are obviously a better choice for small businesses, neither of these financial institutions provide ideal numbers for small-business owners in need of working capital. Thankfully they have that option in alternative lenders, who approved roughly 64 percent of the loan requests received.

Small-business owners who do not qualify for a traditional bank loan should consider alternative financing. Of the owners who sought out and used an alternative funding method, 38 percent said they did so because they did not qualify for traditional bank financing.

Many alternative lending firms have less stringent qualifications for small-business owners. Due to these less restrictive stipulations, alternative financing can be a rather attractive option for many small businesses.

Short and quick

Twenty percent of small-business owners who took advantage of the alternative financing did so due to only needing a short-term loan. Since so many big banks are focusing larger loans with greater returns, those owners who need a short-term loan will find much better results with an alternative financier.

Most small-business owners opted to only borrow $100,000 or less, with 40 percent going this route.

In addition to providing a solution for a short-term fix, alternative financing remains a quick and fairly effortless process, especially when compared to the amount of work involved in acquiring a traditional loan. Most banks and credits employ numerous loan committees which can drag out loan applications for weeks and even months. Meanwhile, most alternative lenders provide easy, online access for loan applications that can be as short as a few hours. For quick and easy access to capital, small-business owners should consider alternative lending.

Interest rates

While it is true that many of the alternative lending options charge higher interest rates than traditional banks, this is because of the smaller amounts being loaned out. With smaller loans, higher returns are needed for the lender to remain in business. Alternative financiers cater to mid-prime customers with clear terms and set monthly fees in a reasonable payback period.

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Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

 

Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

  
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.